Top Indian Stocks Poised to Lead the Battery Recycling Revolution

With the accelerating demand for portable energy sources, the world is increasingly reliant on batteries for everything from consumer electronics to electric vehicles (EVs). This surge in battery usage brings environmental challenges, particularly concerning the disposal and recycling of used batteries.

Without proper recycling protocols, discarded batteries can release hazardous materials like lead, cadmium, and lithium, contaminating soil and water. Therefore, battery recycling is critical not just to minimize environmental risks but also to recover valuable materials and encourage sustainable business practices.

Battery recycling involves collecting, processing, and repurposing used batteries to extract reusable components, ensuring that toxic substances are handled safely. By developing efficient recycling systems, the need for raw material extraction is reduced, conserving natural resources and lowering greenhouse gas emissions.

As governments worldwide implement regulations and incentives for recycling, the global battery recycling market is set to expand significantly. According to estimates, global production scrap is expected to reach 86 GWh by 2024, with projections for it to reach 200 GWh by 2030. In fact, available feedstock for battery recycling could reach 522 GWh by 2032, representing 16% of total battery demand.

Here, we explore four companies in India that are poised to benefit from the rise of battery recycling. These companies either lead in battery recycling management or supply crucial raw materials to support the process.

1. Himadri Speciality Chemicals

Himadri Speciality Chemicals, a key player in the production of carbon materials and chemicals, has made significant strides in battery recycling, particularly in the production of lithium-ion battery anode material. The company is a leader in the production of advanced carbon materials in India and is recognized for its innovation in the lithium-ion battery value chain.

Himadri’s dominance in the coal pitch industry, where it holds the top position in India, strengthens its role in battery production and recycling. The company also specializes in coal tar pitch, carbon black, refined naphthalene, specialty oils, and more.

Financially, Himadri is well-positioned, having reported a 26.2% revenue growth in Q1 FY25 and a 43.2% EBITDA increase. Looking forward, the company plans to invest Rs 2.2 billion to expand its capacity for specialty carbon black production by 130,000 metric tons per annum by Q3 FY26, setting itself up for long-term growth.

2. Kabra Extrusion Technik

Kabra Extrusion Technik, part of the Kolsite group, has diversified from plastic extrusion machinery into the battery manufacturing space, particularly lithium-ion batteries. The company generates 43% of its revenue from its battery manufacturing division, which caters to electric two- and three-wheelers, light commercial vehicles, and battery swapping stations.

Kabra Extrusion Technik commands an 18% market share in the lithium-ion battery sector and has established a strong presence in over 100 countries. The company's battery division, located in Chakan, Pune, expanded its annual production capacity to 2 GWh in FY24, with an investment of Rs 1 billion.

Though Kabra reported a 34% revenue decline in Q1 FY25, it continues to focus on the growing demand for Battery Energy Storage Systems (BESS). A new partnership with EVE Power Co. Ltd. in June 2024 aims to develop advanced BESS solutions, positioning Kabra as a key player in India’s evolving power sector.

3. NILE Ltd.

Nile Ltd. has been a key manufacturer of pure lead since its inception in 1984, primarily serving lead-acid battery manufacturers. The company operates two lead recycling plants in India, with a combined capacity of 107,000 tons per annum.

NILE is also expanding into lithium-ion battery recycling through its subsidiary, NLCPL, which is expected to incur a capital expenditure of Rs 600 million between FY24 and FY26. The company’s close relationship with Amara Raja Batteries, which accounts for 91% of its sales, provides Nile with a reliable revenue stream. This strategic partnership, coupled with NILE’s recycling facilities located near Amara Raja’s factory, strengthens its market position.

Financially, NILE delivered robust results in Q1 FY25, with consolidated revenue growing by 52.2% and EBITDA by 70.7%. These figures reflect the company’s strong position in the battery recycling space.

4. Namo E-waste Management

Founded in 2014, Namo E-waste Management has quickly risen to become a leader in electronic waste (e-waste) recycling, including batteries. The company provides comprehensive services for the recycling of electronic and electrical equipment, including air conditioners, laptops, mobile phones, and more.

Namo derives 70% of its revenue from electronic recycling and plans to expand into lithium battery recycling through its subsidiary, Tech Eco Waste Management LLP. This new plant in Nashik will recycle waste lithium batteries from various sources, including cell phones, laptops, and electric vehicles.

Despite being a relatively new player, Namo’s focus on lithium battery recycling positions it well for future growth. Its strong geographical presence and expanding recycling infrastructure give it a competitive edge in the e-waste and battery recycling markets.

Conclusion: Battery Recycling – A Sustainable Investment Opportunity

The battery recycling megatrend represents a crucial transformation in the global energy landscape, driven by the increasing demand for electric vehicles and renewable energy storage solutions. As environmental sustainability becomes a priority, the need for efficient battery recycling will only continue to grow.

For investors, this presents an exciting opportunity to invest in companies that are not only leaders in this space but also those innovating with new technologies and building strong supply chains. Companies like Himadri Speciality Chemicals, Kabra Extrusion Technik, Nile Ltd., and Namo E-waste Management are well-positioned to capitalize on this shift toward a circular economy.

However, it’s important to acknowledge the challenges that come with investing in battery recycling. The industry is subject to regulatory hurdles, technological uncertainties, and high capital requirements. Investors should carefully evaluate these factors before diving in.

That said, the potential for significant returns in the battery recycling sector is undeniable. With the right strategy, investors can both support a sustainable future and unlock substantial financial rewards.

Disclaimer: This article is for informational purposes only and should not be considered investment advice. Always conduct your own research or consult with a financial advisor before making investment decisions.